US authorities have auctioned off the bankrupt Silicon Valley Bank (SVB) with the aim of finding a buyer before Asian markets open on Monday (Tokyo opens at 1am Italian time). According to the Washington Post, the deadline for submitting bids was set for Sunday at 20 p.m.
Democrat Josh Harder, a member of the House of Representatives, confirmed the auction to the Axios website, saying the deadline could be extended to give potential buyers time to study SVB's accounts.
The race against time of the American authorities is reminiscent of the weekend of 13 and 14 September 2008. They could not find a buyer for Lehman Brothers, forcing it into bankruptcy on Monday, with dramatic consequences for the financial sector and the economy as a whole.
While the big banks have so far been spared, several medium-sized or regional American institutions collapsed on Friday, shunned by worried investors. This is the case of California's First Republic, which has lost almost 30% in two sessions, Thursday and Friday, and Signature Bank, which has lost a third of its value since Wednesday evening.
The two institutions, like SVB, have a large percentage of companies in their client portfolio, whose deposits often exceed the maximum amount insured by the FDIC (Federal Deposit Insurance Corporation), i.e. $250,000 per depositor, which could prompt them to withdraw their funds. According to data published by the institute, about 96% of SVB's deposits are not covered.
In addition to the stability of the banking system, many are concerned about the impact of SVB's failure on the technology sector in the United States and beyond. SVB boasted that it had "nearly half" of U.S.-funded technology and life sciences companies among its clients.
In the event that a buyer cannot be found, to avoid panic among customers of other banks and to send a strong signal, writes the Washington Post, the American authorities are considering the possibility of a plan "b", or the possibility of guaranteeing all SVB deposits.
According to a document published Wednesday by the institute, SVB's deposits amounted to about $170 billion, but in the meantime colossal withdrawals have occurred. On Thursday alone, withdrawal orders worth about $42 billion were placed, but not all of them could be honored. "Many of the depositors are small businesses that need access to their funds to pay their bills and employ tens of thousands of people," Yellen said. "It's a problem and we're working with regulators to resolve it," he continued.
British Finance Minister Jeremy Hunt said today that the collapse of the SVB poses a "serious risk" to his country's technology sector. The turmoil of the SVB saga has also extended to the cryptocurrency space.
The digital currency USDC, known as a "stablecoin" because it is theoretically pegged to the dollar, has fallen since Friday after its creator, Circle, announced that it had left $3.3 billion in SVB's coffers. Other "stablecoins," which are supposed to protect cryptocurrency investors from legendary industry volatility, have also fallen, such as Dai and USDD.
The Fed, for its part, is considering easing the terms for banks to access the discount window to give institutions the ability to convert assets that have lost value into lossless cash such as those of Silicon Valley Bank. This was reported by the Bloomberg agency citing some sources.
Bank of London has confirmed the submission of a formal proposal for the UK division of SVB. This was reported by the Bloomberg agency.